Are there such things as ‘public banking campaigners’ in this country, as there are in the USA?
I’m not sure. There is Move Your Money. There are the redoubtable people who are actually trying to start local banks. But not quite what they have over there.
I mention this because the campaigners at the PublicBanking Institute based in California have been searching the website of the Federal deposit Insurance Corporation (FDIC) and were unnerved to find a agreement there with our very own Bank of England, which seemed to imply that fiuture US bank bail-outs would involve losses for investors and depositors.
Why the Bank of England? Good question and the answer is that US law now forbids public money being used to bail out a failing bank, which means that other institutions are going to have to be involved. And that means agreements along the lines of those imposed on Cyprus, or so he campaigners say.
It is good to see that plans are being laid for that eventuality, though it is strange that the Bank of England is preparing the way to bail-out American banks – perhaps if they are major players in the UK market.
But all of this is in some ways beside the point because the revelation has led to a fascinating heart-searching among US local authorities.
If we have a looming derivatives crash – and who can say we haven't – then money kept in the Wall Street banks may become partly forfeit. It makes sense then to remove city or or other local government deposits from the Wall Street banks and to keep them in relatively safer local ones. More than that: it may well be their fiduciary duty to do so.
The campaigners have issued an online video to put their point across to city halls and state assemblies.
There are also signs of a local government revolt against the big banks over there, San Francisco is launching its own bank. Philadelphia is suing its own Wall Street banks for losses incurred because of the Libor rate fixing scandal.
But then, US consumers have a massive advantage over those in the UK,. They have local banks they can choose if they dissatisfied. After three years of a coalition dedicated to 'rebalancing the economy', we still don’t. But I believe we will.